I opened a shop in Noosa (not one of my better ideas) for Gardenware in 2008. Up until then, Gardenware had focused on very high end and hard to find tools and garden products for the home garden enthusiast. The niche was small but we had exclusivity on several brands and being mail order we had the whole of Australia as our market.
With a physical shop, I was relying on customers within a certain geographic radius. Products as niche as Gardenware’s just weren’t suitable for that, so I had to broaden my product mix. Broadening our offer to encompass landscape products seemed a logical transition. I thought we could appeal to garden lovers that didn’t want to do the work themselves.
The First Container Purchased
I discovered IOTA planters from the UK and bought a container at the beginning of 2008. The more we got into the market for exclusive planters, the more I realised that the target markets of Gardenware and IOTA couldn’t be more different.
Mark Chessell, managing director of IOTA, suggested a franchise agreement. Under it, I could trade under the name IOTA Australia. I could then leverage the international brand and use all the marketing and brand assets they had in the UK. Assets like; photos, case studies, catalogue templates etc.
I was thrilled with his proposal and jumped on the opportunity straight away. It enabled me to build a brand that already had a strong platform. We were able to close large commercial sales that we may have missed out on if we didn’t have this international reputation.
Global Financial Crisis
It was tough going in the early days, the GFC hit a few months after we launched and my shop in Noosa had real problems. Most of the problems were related to the lack of foot traffic and our inability, or managements’, to turn that around. Since then the whole centre has closed down.
We gave up on the retail idea in Noosa and re-branded the shop to IOTA. Since there was no foot traffic, I converted the shop into to my office and showroom. While that was much better, as soon as I had the opportunity to get out of my lease, I took it and moved the entire operation to my home town in AMAMOOR.
I leased some rural land off a neighbour and built some warehouse space out of shipping containers and other second hand materials and reduced our overheads by over half. I could now sleep a lot better at night.
Change to a Low overhead Business Model
That was in early 2010 and continued with this low overhead model for the next few years. Getting inspiration from The-E-Myth-Revisited I was able to develop operational procedures. From packing orders and shipping to marketing.
The main problem with warehousing out in the bush was the cost of freight. Our fixed costs were down, but our variable costs were high. I was also concerned with the reputation of IOTA and the public perception of warehousing in such a way with no real showroom. While profitable, our growth had slowed and I felt we would plateau without increasing our profile.
By mid 2012 we had the turnover to justify a warehouse and showroom in Brisbane. The savings in freight would largely offset the rent. The additional sales generated by having a showroom should also increase sales.
Growing Pains – New Warehouse
I chose the Redcliffe peninsula for personal as well as business reasons. On the business side, the rent was much cheaper than Brisbane while still within the Q1 freight circumference (i.e. our freight rates were the same as Brisbane). There was little competition for pots on the north side and I estimated it wasn’t too far for people to come from Brisbane when they found us on the web.
On the personal side, it was closer to home. There was also less traffic in Redcliffe than Brisbane, and I loved the area particularly the beach. I walk along the boardwalk there most afternoons and I consider it Brisbane’s best kept secret. Similar geography in Sydney or Melbourne would be in high demand.
Overnight Success After 5 Years
The move to Clontarf was one of my better ideas. All my assumptions have proven accurate (which is rare). The walk-in sales and savings in freight more than offset the additional expenses. People are also prepared to travel from all over Brisbane and the biggest one is that national sales have increased and IOTA’s growth started to climb again.
This, in combination with the work I have put in to creating systems and processes has made IOTA Australia a profitable and manageable entity. I run IOTA myself and have the help of a few casual contractors to help with the heavy lifting, cleaning and yard maintenance.
While I have to be present, since it is a showroom, my direct involvement on IOTA averages less than 10 hours per week. I spend most my time in the showroom office working on my other business interests.
Preparing to Sell IOTA?
I am ready for a change. I have lost the motivation for IOTA that I once had. While that is ok in the short term and I am not neglecting anything, I am no longer looking out for new opportunities with the passion I once had. I have become comfortable with IOTA as it is and I am happy to keep the status quo. This will inhibit the growth of IOTA in the long term. Since I recognise this decline in my personal motivation for IOTA I believe it is best to move on eventually.
Part of the reason for my desire to move on is my passion for web design and development. This has always been the case since my first attempts at websites back when I started Gardenware in 2003. It’s one of the few things in my work life where I get completely obsessed and lose track of time. I love it and realise developing solutions for websites is a passion and what I want to pursue in more depth.
New Business Path
I get a lot of compliments on the IOTA website www.iotagarden.com.au. And while I take great pride in it I realise I have over-capitalised on the IOTA web site. At least a lot of it was my own time, but the reality is I spent so much time on it because I was completely obsessed and enjoyed the process so much. Looking back, I think my time could have been better spent marketing and building relationships with potential clients.
But this networking and sales is not my strong point. Instead, I have decided to focus on what is and what I enjoy, and that’s building and maintaining websites and digital strategy.
The other reason for selling IOTA is that I can. It has been a tough road since start up and IOTA is now in a place that is profitable and doesn’t require my full attention. I feel like I have all my ducks in a row and it’s the first time I have felt like I am in a position to sell.
Think I’ll Stick Around For Another Year
On the other hand I am in no great rush. IOTA is pretty smooth sailing for me now and allows me the time to pursue my new business interests and career change. Without me doing anything extra, I expect 10-15% natural growth year on year. So if I can’t get the price I want for IOTA it is only going up in value while I wait.
I set a deadline for the end of the Australian financial year, June 30 2015, to put IOTA on the market. I have shared parts of this story to friends over the last 6 months and they all look at me like I am an idiot when I say I want to sell. “You mean you have a profitable business that takes you less than 10 hours a week and you want to sell it”. I get their point. So I have decided to stick around for another year and re-assess if I will sell in 2016.